I happen to mostly like when the new year starts on a Wednesday. It basically means two weeks of nothing going on (at least not which matters too much) and time to catch up on some of the less significant stories making the rounds. One such story which was a fun read was predictions from airline CEOs (and one other guy) about what the future of the aviation industry will bring.
Some of the predictions are so obvious as to be downright silly. Delta‘s CEO predicts fewer 50-seat RJs flying within 5 years (duh!) and United’s CEO thinks that fuel efficiency will continue to rise while operating/maintenance costs will go down (double duh!). Both predictions are so obvious and actually already happening so it is hard to say that they are really predictions at all.
Other predictions are less positive. Mark Dunkerley, CEO Hawaiian Airlines, is predicting that many passengers will be priced out of the market. This will come about because of insufficient investments in infrastructure and a highly regulated industry, both of which will drive costs up faster than the efficiencies of modern planes can push them back down. This claim is countered by Etihad CEO James Hogan who sees the new major carriers in the emerging markets as keeping fares in check, though it is not clear what their impact will be on local/regional traffic versus long-haul service.
And, finally, there are the slightly crazy predictions. Richard Branson (the only non-CEO on the list) expects space flight to become a very real commercial travel experience, with things like sub-2 hour flights from London to Sydney possible. I won’t argue that it is possible but it certainly plays in to the predictions Dunkerley made about travel becoming less affordable.
As for me, I don’t have too many predictions related to the industry overall. I certainly continue to believe that the loyalty program side of things is going to continue its shift towards a revenue-based model from a distance-based one. Of course, I made fun of two CEOs for “predicting” something which is already happening so me making that claim here probably isn’t so bold. And on the longer horizon – say 25+ years out – I don’t actually think all that much will change in terms of how we’re flying around the world. I do not expect individualized transport which skips airports and connections, for example, just like I don’t expect massive numbers of passengers flying in space nor drones to be handling package delivery. Not because it is impossible – far from that – but because it isn’t going to be financially viable. Lots of things are possible but very few of them happen unless someone figures out how to make money selling that service. We’re a long way out on many things there.
What are your predictions for the coming year? Five years? Longer?
Random aside: Christmas and New Years were also on a Wednesday in 2002. I was quoted in a NYTimes story about it then. Not much has changed in the intervening 13 years.
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predict or manipulate it?
I predict this shift by United and Delta to revenue based requirements will alienate and cause more than just the few mileage runner customers to become disengaged – the net affect will be a wash at best and perhaps negative. It also makes the bar to become “engaged” as a customer that much higher. In the end I think Virgin America and JetBlue may benefit most.
I read the article the other day. I don’t know why will they ask so many US airline CEOs that question, clearly they have been playing catch up, they don’t have a clue about the future.
Let me give them a hint, they need to have a global presence in other routes that are not to/from the US.
That’s simply not going to happen, Nic, just like you aren’t going to see foreign carriers operating within the USA. Alliances – especially the JV/ATI ones where the airline partners can collude on prices and scheduling – make it possible to sell the flights as though they are a global airline without needing to deal with the regulatory hurdles of actually being one. And the significance of those alliances will grow, not shrink, in the coming years.
I was stunned at the lack of vision in this report. As you say, many of the CEOs stated the bleeding obvious (I nearly spit out my tea when I read the RJ prediction…please.) Here’s a prediction for the next few years – more women will assume C-level positions at airlines (finally), and more women will be invited to the boardroom, because they have vision, drive and Cojones. See Carolyn McCall.